2006 (8) TMI 196 - HC - Central Excise

Court upholds furnace classification for excise duty, imposes 50% penalty for delayed payment

The High Court dismissed both appeals regarding the classification of a furnace for excise duty assessment. The Court upheld the imposition of a 50% ... Penalty - Appeal to High Court Issues:1. Assessment under 'Compounded Levy Scheme' for excise duty on furnace type.2. Imposition of penalty for delayed payment of excise duty.Analysis:1. The judgment dealt with two appeals arising from the same order of the Customs, Excise and Service Tax Appellate Tribunal regarding the classification of a furnace for excise duty assessment. The assessee contended that the furnace was 'batch type' while the revenue determined it as 'pusher type,' leading to a higher duty liability. The Commissioner (Appeals) and the Tribunal upheld the higher duty payment along with interest and penalty, as the duty had not been paid despite no stay of the liability. The revenue argued for a penalty equal to the duty amount under Rule 96ZP(3) of the 1994 Rules. On the other hand, the assessee claimed no penalty should be levied due to a bona fide dispute without any intention to evade duty.2. The High Court, comprising Adarsh Kumar Goel and Rajesh Bindal, JJ., dismissed both appeals. The Court held that the provision for penalty under Rule 96ZP(3) was a maximum, not a minimum, and the penalty imposition should consider the circumstances, including the delay period and amount involved. The argument of no mens rea for penalty imposition was rejected, emphasizing that penalties aim to deter delayed duty payments. The discretion exercised by the Commissioner (Appeals) and the Tribunal in imposing a 50% penalty was upheld, noting that unless the Tribunal's decision is perverse, interference is not warranted under Section 35G of the 1994 Rules. The Court concluded that no substantial question of law arose, leading to the dismissal of both appeals.